- Marzo 18, 2022
- Posted by: Oliver
- Categoria: Economics, Finance & accounting
Let’s start off with Shoals, a provider of electrical balance of system (EBOS) products for solar energy projects. The company manufactures various EBOS parts; these include combiners and recombiners, inline fuses, disconnects, cable assemblies and wireless monitoring systems, amongst others.
Shoals is enjoying growth as the solar sector advances. High commodity prices are encouraging more expenditure in renewable energy, and firms like Shoals will benefit from this trend.
In the company’s latest quarterly statement, for 4Q21, revenue rose by 24% year-over-year to reach $48.04 million, beating the Street’s $46 million forecast. That said, the company posted a miss on the bottom-line, with EPS of -$0.04 coming in shy of the consensus estimate of $0.02. Looking ahead, the company expects 1Q revenue between $68-74 million, representing ~56% y/y growth at the mid-point.
Missing on profit is a big no-no in the current risk-off environment, but in contrast to the market’s now customary downbeat reaction to such misses, SHLS stock enjoyed a nice uptick following the report.
J.P. Morgan’s Mark Strouse puts the positive reaction to a “significantly better than feared outlook,” while the company’s record backlog (the company saw out Q4 with $299 million in backlog, up ~94% year-over-year) is a “strong indicator” of demand and that the customer count “continues to build.”
There’s also further market expansion in the pipeline, according to Strouse. “SHLS received certification in February to begin selling its solutions in Europe. Backlog is expected to build during FY22, with material revenue contribution beginning in FY23. The company is also building out a sales force in LatAm,” the 5-star analyst noted.
“We continue to believe that SHLS is a core-holding for long-term investors seeking exposure to a highly-profitable growth company in the solar space,” Strouse summed up.
Accordingly, Strouse rates SHLS an Overweight (i.e. Buy), while his $35 price target makes room for 72% growth over the next 12 months.
Most on the Street agree. Based on 6 Buys vs. 2 Holds, the analyst consensus considers this name a Strong Buy. There are solid gains projected too; going by the $29.13 average target, the stock will climb ~43% higher in the year ahead.
